South Korea’s retail conglomerate E-Land Group facing liquidity woes has decided to postpone the initial public offering (IPO) of E-Land Retail to next year and meanwhile sell some of its shares in the retail unit ahead to secure funds of around 600 billion won ($537 million), according to E-Land Retail on Monday.

The group’s alternative plan came after conditions for an IPO turned unfavorable amid negative publicity over overdue wages of 8.4 million won by the retailer’s subsidiary E-Land Park.

E-Land Retail that runs retail outlets including Kim’s Club and New Core Outlet submitted an application for a preliminary IPO review to the Korea Exchange (KRX) in December last year with an aim to complete the listing by May this year. But the issue of the unpaid wages posed as upset to the IPO plan. The company has been pinning hopes that its public debut on the local bourse could help ease the group-wide financial woes without hurting the corporate value.

E-Land World, the group’s holding company, had debt ratio of over 400 percent until last year, but managed to lower it to the 200 percent range after selling several real estate properties and its apparel label Teenie Weenie to China’s clothing company V-Grass Fashion Co. for 877 billion won last year. Its original plan was to list E-Land Retail within the first half of this year and lower the debt ratio to below 200 percent to get a respite.

The group claims that it is still confident in improving its financial soundness despite the postponement. Instead of the IPO, it now plans to pay off 300 billion won debt maturing in June by raising 600 billion won through the sale of equities in E-Land Retail held by E-Land World and to dispose of other real estate assets worth 300 billion won and some unpopular brands to secure additional 50 billion won. A series of stake and asset sales are expected to lower the debt ratio to 200 percent or under by the end of this year, the group said.

By Hong Jang-won and Park Yun-gu

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]